Staff recommends that City Council approve the agreement with BBWA to convey water to the reservoirs.

The City is constructing a water treatment plant and raw water storage reservoirs on the west end of Billings.  The original plan for the project included a river intake and pump station at the Yellowstone River and a large diameter pipe from the river to the reservoirs.  The cost of the intake, pump station and pipeline are estimated at approximately $35 million. Given the increased cost of construction, city staff has been reviewing options to reduce the overall project cost.  While using the BBWA has limitations, it was determined by staff to be the best option at this time.  The biggest limitation with use of the BBWA is the inability to convey water during winter months.  One of the improvements that will be made to the system is the installation of another headgate at the river or modification of an existing headgate.  The modification or addition will enable the city to use the intake during times of low river flow when temperatures are adequate to flow water to the reservoirs.  Other improvements will be made at the Canyon Creek Flume and lining will be added to stretches of the canal that experience significant seepage.  The agreement calls for the BBWA to continue to maintain these facilities, with the exception of a new gate, if it is added. The City will also construct a diversion structure at the reservoir site to allow water to be diverted from the BBWA canal into the reservoirs.  This structure will also serve as an offloader in the event the BBWA experiences a breach or backup.  With the addition of this structure, a significant amount of water can be diverted to Canyon Creek as well as to the reservoirs.

The agreement also defines the annual fee that the city will pay the BBWA.  The fee is based on a volumetric percentage of the overall flow and has an escalation clause based on the Consumer Price Index (CPI).  The fee is less than the operations cost of the proposed intake and pump station, so the City will actually have lower O&M costs using the BBWA versus an intake and pump station.

Staff is recommending that the City utilize the BBWA for at least the next 5–10 years to see if the winter operations can meet our needs as well as if the overall conveyance through the BBWA continues to be beneficial or if other issues arise.  If the City determines it would be better to have an intake and pump station, the project can be scheduled in the future and budgeted appropriately.  

City Council may:

• Approve the agreement with the BBWA; or,
• Not approve the agreement.  If the agreement is not approved, the City will need to construct a river intake, pump station and pipeline to serve the reservoirs and water treatment plant.  The cost of these facilities would require rate increases to water users.

The agreement includes some capital investment into the BBWA Canal and diversion structure. While the exact amount if unknown until the project is bid, the FY24 budget includes $3 million for improvements.  The agreement also includes an annual fee of $150,000.  Both of these costs will come from water funds.